Payment cards, e.g., debit cards, credit cards, and the like, provide a convenient and widely used payment mechanism at merchant locations around the world. Consumers do not generally pay a separate or explicit fee for the use of payment cards. However, a merchant generally pays a percentage-based transaction fee in order to receive payment on the transaction. For example, the merchant generally pays a fee, sometimes referred to as an interchange fee, to an issuing institution, e.g., a bank issuing a credit card. Further, the merchant generally pays a processing fee to a processor handling a transaction on behalf of the issuing institution. The interchange fee and also the processing fee are generally based on a percentage of the transaction's value, and hence constitute a percentage-based transaction fee.
A merchant may conduct many transactions in which a payment card is not used, even as a payment card is used for some of the merchant's transactions. For example, many merchant accept cash or checks in addition to payment cards. Others may also or alternatively send invoices to their customers. In any event, because percentage-based transaction fees must be paid by a merchant, the merchant may offer goods and services at a higher price than would otherwise be the case in order to pay transaction fees for transactions in which a customer uses a payment card. Further, payment card issuers generally do not allow merchants paying a percentage-based transaction fee to charge payment card customers a different price for goods and services than other customers, e.g., cash customers, pay. Therefore, merchants presently must price goods and services for all transactions to accommodate the subset of transactions in which a consumer uses a payment card. As a result, merchants and consumers alike bear higher transaction costs to accommodate the subset of transactions in which a payment card is utilized.
Transactions using a payment card are very often conducted electronically. A merchant location may have one or more terminal devices equipped to read data from a magnetic strip on a payment card, e.g., when the card is “swiped.” A terminal device may be connected to a network, and may thereby communicate with the processor. The processor may in turn communicate with the issuing institution via the network or some other network. Communications between a terminal device, a processor, and/or an issuing institution often occur substantially in real-time.
Processing rules for different payment cards may be different. For example, present merchant terminals may be configured to process credit card transactions differently than debit card transactions. However, where different kinds of payment cards fall into a same category, e.g., credit cards, present merchant terminals generally process the different kinds of payment cards in the category, e.g., MasterCard, Visa, Discover, etc., in a like manner. In particular, a merchant terminal configured to process credit cards according to a percentage-based transaction fee is presently unable to process credit cards according to a flat fee. Similarly, a merchant terminal configured to process debit cards according to a percentage-based transaction fee is presently unable to process credit cards according to a flat fee.